Varley Law Office PLC

Varley Law Office PLC
201 NE 2nd ST, Stuart, Iowa 50250; (515) 523-2456

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Friday, July 30, 2010

Renegotiating Farm Leases

Now is the time dictated by Iowa law to begin negotiating crop land leases for 2011 or at least notify your tenant/landlord, as the case may be, if you wish to change any of the terms in your current lease. (Remember that mutual consent is required if you want to make changes in the middle of a multi-year lease.)
Basing cropland rent on the CSR (“corn suitability rating” or in some regions “crop suitability rating”) of the soil in question is the most accurate and fair way to arrive at a comparable rent [See Computing a Cropland Cash Rental Rate: http://www.extension.iastate.edu/Publications/FM1801.pdf]. As was the case last year, I think $3/pt will catch most of the rents on good quality farm land in this area. This does not mean rent for your particular farm should go down, if the rent you charge has been stagnant or lagged behind the run up in recent years. At a minimum, you want to keep up with inflation. Increased rain this year has resulted in a tighter supply of quality hay and correspondingly higher demand for hay land for next year.
If you wish to terminate a cropland lease ending March 1, 2011, and have not already done so, you must serve notice in the manner set out in Iowa Code §562.7 on or before September 1, 2010. This statute does not apply to forage land leases (pasture and hay) or custom farming arrangements, but by tradition, many farm operators have come to expect notice by September 1 and may become surly or even confrontational if notice is delayed past that date.
There is some uncertainty regarding whether mailed notice will be sufficient to terminate a farm lease because of an Iowa Supreme Court case this year ruling that mailed notice was unconstitutionally insufficient due process to give to a residential renter in an eviction case. I believe certified mail is still a constitutional form of notice under Iowa Code chapter 562, so long as it is mailed early enough that you know it will arrive before September 1. However, the Iowa Supreme Court has not ruled on that question. If you want to be absolutely certain that you have given adequate notice, you should either have a signed acknowledgment of notice from the opposing party (landlord or tenant) or you should have notice personally served by law enforcement or a private process server.